Credit Cards Tempt Consumers With Lower Rates

By Quentin Fottrell

iStockphoto

It looks like consumers are not preparing to cut up their credit cards just yet, despite a background of economic uncertainty and fears of a double-dip recession. Experts say that means retailers will want to take advantage of this confidence while it lasts with early sales. Interest rates on credit cards fell to below 13% in the second quarter of the year – according to new data released Friday from the Federal Reserve – hitting 12.92% down from 13.48% in the first quarter.

Although the Fed’ report showed consumer credit unexpectedly plummeting by $9.5 billion last month – the biggest decline since April 2010 – analysts say that drop is to do more to banks writing off debt than consumers changing their behavior. When that’s taken into account, consumer credit actually rose 66% in the second quarter, says Odysseas Papadimitriou, the chief executive of CardHub.com.

This is good news for bargain hunters, experts say. The interest rates on credit cards haven’t fallen below 13% since the onset of the Great Recession in 2008. Secondly, banks are showing confidence in consumers and want them to shop. They can go shopping again while this confidence lasts.“Consumers have not learnt their lesson,” says Papadimitriou says. “Expect to see that retail sales bonanza earlier rather than later.”

Recently released auto sales figures for September were also buoyant. They rose to 13 million in September, up from 12.6 million in August, according to data from the major car companies. “This is further evidence that consumers are not retrenching,” says Troy Davig, economist with Barclays Capital Research. “People usually pay for cars with loans. We’re seeing lending from banks.” Papadimitriou says that means more spending. “Banks are lending and retailers will want to take advantage of this as soon as possible.”

Sorry Judy, but the next time you need to get your credit reprot just remember where your personal information is going. And I suspect that yo have not experienced this YET! How about someone over seas having your money informatin, or your name on credit cards that you can’t get them arrested. Just think about that Ms. Judy. And our economy doesn’t need our information going over seas for them to rip us off more. Government can control by passing laws that make American companies responsible for American citizens. You may be next, I would love to hear all about it when it happens to you.

About Pay Dirt

Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.